INSIGHT-Has Volkswagen discovered the Holy Grail of carmakers?

BERLIN/DETROIT, Feb 11 (Reuters) - Ulrich Hackenberg isn'tyet a household name but if Volkswagen's $70 billion bet on hisbig idea pays off, he may join the likes of Henry Ford, AlfredSloan and Taiichi Ohno in the canon of auto industry pioneers.

Since the heyday of Henry Ford and his Model T, the world'sautomakers have considered the "global car" to be their HolyGrail - the same basic design that can be built, in subtlevariations, and sold in different markets.

Take that fundamental concept, stretch it across manydifferent vehicle types, sizes and brands, then build them bythe millions, and you begin to sense the enormity ofVolkswagen's rapidly evolving "mega-platform"strategy and its potential impact on competitors around theglobe.

Auto engineer Hackenberg nurtured this bright idea for threedecades, after early pitches to auto executives were largelyignored, until somebody finally bought it wholesale. The man whobit was Volkswagen Chief Executive Officer Martin Winterkorn.

Hackenberg's fundamental rethink of vehicle platforms, theindustrial Lego from which cars are designed and made, ishelping power the German company to the top of the global salescharts several years ahead of its 2018 target. It could alsomake VW one of the most profitable carmakers in the world.

The strategy is not without risk. It could, for instance,expose Volkswagen to the threat of a massive global recall if asingle part, used in millions of cars, fails.

But rivals have taken note of the power behind its move.Volkswagen's modular platforms are being benchmarked by most ofthe world's top automakers, including Toyota Motor Corp and Ford Motor Co, according to company executives.

"We'd be crazy not to," said a senior Ford official,requesting anonymity because of the proprietary nature of thesubject.

VW's work on its largest mega-platform, known internally asMQB, began in earnest in 2007 and is being implemented over thenext four years at a cost of nearly $70 billion, estimatesMorgan Stanley. The potential payoff is compelling: Projectedannual gross savings by 2019 of $19 billion, according to thebank, with gross margins approaching 10 percent.

The automaker is expected to announce a record profit for2012 of more than $30 billion later this month (Feb. 22),according to Bernstein Research, whose senior analyst, MaxWarburton, observes: "VW looks to have unstoppable momentum - inChina, the U.S., Europe and most of the rest of the world."

That momentum has been building for some time, even beforethe initial deployment last year of Hackenberg's brainchild.

Industry-leading levels of commonality - the proportion ofparts that can be shared among different models - are nothingnew to VW. At a gathering in Japan five years ago, Renault and Nissan executives lifted the hoods onseveral VW Group vehicles side by side - including models fromSkoda, Seat and Audi brands - and saw trouble.

"They had the same engines, the same clutches, the sameventilation - all identical parts," says an executive whoattended the presentation. "It was a level of commonality thatdidn't exist at Renault-Nissan."

Late in 2011, as the outlook darkened for French carmakerPSA Peugeot Citroen, its board was given a similardemonstration, and a similar shock, at the company'shigh-security research center in Velizy, southwest of Paris.Technicians took apart the front ends of two different VW carsand swapped most of their components.

"They were a little dumbstruck by the realization that therewas a whole new world out there - and their development was 10years behind," recalls one participant.

SIX-YEAR GESTATION

After a six-year gestation, VW has just begun to implementits sophisticated and highly flexible platform with thedeceptively simple label MQB, a German acronym for "modulartransverse matrix." Virtually all of the group's small andmedium front-wheel-drive family models, including the latestgenerations of the VW Golf and Audi A3, are being designedaround MQB as their base.

The new platform features a far greater degree ofplug-and-play modularity, flexibility and parts commonality thanat Toyota, General Motors Co, Ford and other competitors.

MQB "could be the single most important automotiveinitiative of the past 25 years," says Michael Robinet, managingdirector of IHS Consulting in Northville, Michigan. "It reallychanges the game."

With the new mega-platform strategy supporting its 12brands, from spartan Skoda to Audi, Porsche and Lamborghini, VWis poised to snatch the global sales crown from Toyota as earlyas next year, according to investment bank Morgan Stanley.

VW envisions enormous leverage from MQB. The plan is toboost global sales to 10 million or more, with roughly two outof every three cars - some 40-plus models totaling 6.3 millionsales a year - built on some variation of the MQB platform,according to U.S. research firm IHS Automotive.